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There’s a rumor in circulation that Amazon has beenworking on a DVR that would allow users to record live TV, and thenstream that content to a smartphone and other mobile devices.
Amazon aims to mount a direct challenge to DVR pioneer TiVo — a company that was at theforefront of digital video recording 20 years ago — according to a flurry of reports stemming from a Bloomberg article published earlier this week.
The Amazon DVR, reportedly codenamed “Frank,”will work with Fire TV devices, but it is unclear if it will feature Amazon Prime Video streaming as well.
Amazon’s Lab 126 research and development center — the groupbehind the creation of the Echo speaker — has been working on the DVR, according toBloomberg.
Amazon isn’t exactly late to this market, but its Fire TV products currently stream live content only from partners such as HBO via the Amazon Channels service. The Amazon Fire TVset-top boxes, which are among Amazon’s best-selling products, areunable to record or otherwise store video locally. Nor can they stream content to another device, such as a mobile phone.
By adding DVR functionality, Amazon essentially could take on cable/satellite pay-TVservices, providing the ability to record and location-shift content in a similar fashion.
DVR for Cord Cutters
Amazon’s strategy could be to go after the growing “cord cutter” and”cord never” market — individuals and households who opt not tohave a pay-TV service, and instead get content from other sources,including streaming media.
“It’s likely aimed primarily at cord cutters and cord nevers; bothgroups are growing quickly as users turn away from traditional TV andlegacy delivery from pay-TV operators,” said Jim O’Neill, principalanalyst at Ooyala.
“But it’s very likely that even users who have pay-TV in their homesare watching video from OTT providers and, depending upon where theyget their broadband services, that a storage device would be worthhaving,” he told TechNewsWorld.
“More than half of households that subscribe to pay-TV also subscribeto an SVOD service like Netflix, Hulu or Amazon Prime,” added O’Neill.”If they want to keep content on hand, they very well may use theAmazon box.”
The key missing piece to Amazon’s strategy is where, exactly, users ofits DVR would get content. While premium content could come via AmazonChannels, that still would leave the ability to access local content bothfiguratively and literally up in the air.
“One possibility is an antenna, which is actually an important sourceof TV for a minority of U.S. viewers,” suggested Colin Dixon, principal analyst at nScreen Media.
“While there has been aslowdown in adoption, antennas picked up last year,” he toldTechNewsWorld.
Another possibility could be streaming of broadcast network content,including from local stations.
“We are seeing an uptick in the number of broadcasters — localbroadcasters — who are making locally generated content availableonline, and we expect that number to accelerate,” said O’Neill.
“You can watch CBS All Access through Amazon’s Fire devices, so thatcontent also is likely to be available to save; and Fox, ABC, and NBCall have an increasing amount of their programming online, so havingthe Amazon box likely would allow you to record and save thatcontent,” he added.
Another possibility is that Amazon could take the route of pastproducts — including some TiVo units as well as the now defunct Moxibox — and utilize a cable card to replace a subscriber’straditional set-top box.
“I would actually be shocked if Amazon would support cable cardstoday,” said Dixon. “That technology has been on the decline, and fewTVs actually ship with a cable card slot, so cable card support islukewarm at best.”
Live content could come from online “channels” and other streaming services. Instead of providing another device that simply could be used torecord traditional linear channels from pay-TV outlets,Amazon could pioneer a DVR service for streaming content.
“Over the past 18 months and longer we’ve seen a renaissance in livecontent, and a lot of that content is moving online with consumerhabits,” said Brett Sappington, senior director of research at ParksAssociates.
“It isn’t just traditional broadcasting but is Facebook Live andPeriscope, and now Twitch is live-streaming content,” he toldTechNewsWorld.
“Amazon is getting rights to cover sports, which a few years ago wouldhave been unthinkable — so this just shows how the market ischanging,” Sappington added. “For a company that has online and cloud services,it makes sense for this live play.”
Another unanswered question is where Amazon Prime Video will fit in, butit would seem like a natural extension. A DVR offering could allowAmazon to gain traction on Netflix, which has forged deals to beaccessible not only through smart TVs and Blu-ray players, but morerecently on pay-TV set-top boxes.
Amazon recently has been making headway in the latter category.
“A few weeks ago there was news that Amazon Video would launch onComcast’s Xfinity boxes,” said Kristen Hanich, research analyst atParks Associates.
“We’ve also seen that Apple is forming partnerships to act as astreaming media portal, and that is a direction Amazon might be goingdown as well,” she told TechNewsWorld.
Such partnerships with streaming media services suggest that the pay-TV companies understand that the market has been changing in terms of how viewers get content, and it shows a willingness to accept that more people may forgo the cord in the future.
“This likely is not a short-term play for operators, although theremay be some that begin to look at Amazon Prime Video as an alternativeto offering their own pay-TV services, especially among Tier 2 andTier 3 providers,” said Ooyala’s O’Neill.
“Offering a TV service is an expensive proposition, and some smallertelcos and cable companies have already opted out, choosing to focuson their broadband business,” he added.
“Interestingly, Charter and Comcast, during their earnings callsor investor meetings in the past few months, also have chosen to directmore attention to their broadband businesses,” noted O’Neill.
There are just far better margins in the broadband businessthan there are in the pay-TV business.
“So, could Amazon Prime be offered as an alternative to pay TV?”pondered O’Neill. “Absolutely. It already is the option millions ofcord cutters and cord nevers have decided on.”
The TiVo Killer
Why Amazon is going after TiVo specifically is another questionto consider, especially as other early DVR pioneers — notably Replay TV– have gone by the wayside. TiVo remains a significant player, butAmazon’s strategy to take on that company is sort of like anew smart phone manufacturer wanting to target BlackBerry today.
“It is strange that Amazon would be thinking about TiVo,” notednScreen Media’s Dixon.
“There are so many solutions out there already, and most pay-TVservice operators have ways to watch content on mobile devices anyway,” he said,”so I am not sure who Amazon is even targeting right now.”
Perhaps the BlackBerry comparison is apt, as TiVo is no longer justa retail offering.
“Today TiVo’s significant business is with pay-TV operators, includingin Europe, where there are TiVo boxes that are a premium offering,”said Parks Associates’ Sappington.
“Today TiVo is almost a software player,” he added, “but another comparison is howRoku had success as a set-top device but now they are in smart TVs andother things.”
The DVR market has been a competitive one. While TiVo hasendured, many rivals — including Replay TV and Moxi — have not been aslucky. Amazon’s attempt to enter this market could be a risky one.
“The devil is really in the details, knowing that Amazon has beenconsistently launching products within areas it knows,” notedSappington.
“What we know is that it will be related to Fire TV and that it willhave a strong online component, and we must remember that Amazon Videois already the second largest OTT service, so it makes sense that itwill be part of this DVR,” he suggested.
“Selling Amazon products has been a big part of its business model,but hardware can be tricky,” remarked Sappington.
Amazon also could follow TiVo’s lead and have success in other markets,where DVR penetration isn’t as high. However — in the United States, at least –the risks may not be worth the reward.
“Everyone enters with a splash, but there isn’t news when you leave,” Sappington noted. “Inthis case, Amazon doesn’t need a home run to be successful — even asingle is fine. But if it fails, this will be obvious to everyone.”
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